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Tech companies that reach monopoly scale (like Apple, Facebook, Amazon) should have to disclose all their agreements and honor a "Most Favored Nation" clause gi

Tech companies that reach monopoly scale (like Apple, Facebook, Amazon) should have to disclose all their agreements and honor a "Most Favored Nation" clause giving all companies the same pricing and access as the best negotiated agreement with any one company. This is the most reasonable way I can think of without breaking them up to prevent them picking winners and losers as new opportunities emerge. If you have a better plan I'd be glad to hear it.

CPLX 5y ago
We could also just put a tax of 100% on any revenue in excess of $10bn a year and nip this entire society-destroying problem in the bud.
- smallerfish 5y ago
  It's an interesting thought experiment at least. What would the hidden incentives of something like that be? For example, if a company wanted to keep growing, it would have to split organically into separate corporate entities. What would stop them establishing "favored" relationships with each other? Say for example Facebook splits out "Zuckerburg data centers inc" - what's to stop them pricing themselves above market to avoid taking on other customers, and then giving FB a hefty discount? You could mandate that there be no board overlap, but shareholders would probably receive a split.
  - amelius 5y ago
    If Zuckerberg data centers wants to keep growing, then at some point they will have to find external customers.
  - CPLX 5y ago
    You'd need to actually draft a law rather than write it on a napkin and there would be armies of very well paid lawyers trying to avoid it, but that's common to any attempt to break up concentrated power. In that context it wouldn't be all that hard. You'd need to figure out some definitions for common ownership, joint enterprise, and so on. A lot of those laws and definitions already exist. It's only really in the last few decades that we've abandoned antitrust law but we have successfully done things like this in the past.
    - ameister14 5y ago
      When have we capped the potential revenue of companies successfully in the past? I've never heard of it
- newsbinator 5y ago
  Why not $9bn a year?
  - EastOfTruth 5y ago
    You got to start the discussion somewhere.... For me, I t think that it should be related to the number of employees.
    - loktarogar 5y ago
      A cap on employees would probably be a negative thing, but a cap on revenue per employee would incentivise hiring people
      - EastOfTruth 5y ago
        that's the solution
- EastOfTruth 5y ago
  Talking about monopolies, why does Facebook and HN have network issues at the same time.
  - bigthymer 5y ago
    Maybe people visit other sites when the ones they would have used go down? I don't know for sure but it is a plausible explanation for me.
    - EastOfTruth 5y ago
      makes sense but at the same time it surprises me
- moreira 5y ago
  That -sounds- simple, but it isn't, and in reality any company would easily bypass that by simply creating other companies to take some of the revenue. They already do that to avoid international taxes. As an example, the US charges tax on all income coming to a US company so companies have entities in countries like Ireland and Luxembourg to keep that money out of the US government's reach. So Apple might have $100B stuck in Ireland, unable to bring it to the US, but it doesn't matter, that money still counts for their shareholders. And it's the same thing here. If you try to tax $10B they'll just have 100 companies all making $9.9B/yr, in a variety of different countries, completely separate from each other, and you're back where you started. And while this would be extremely complicated/expensive for them to manage, it'd be profitable because the alternative is to get a 100% tax on those profits. Taxes aren't easy. And calling a company that sells phones a "society-destroying problem" is a bit hyperbolic, don't you think?
  - CPLX 5y ago
    There’s nothing simple about it. It would require pages of statute as well as regulatory guidance, and some of the most wealthy and capable forces in our modern world would be arrayed against it trying to avoid and evade the rules. None of those things make the proposal impossible however. It would be a dismal society indeed if we unilaterally surrendered to every instance of centralized malevolent power without a fight.
- ric2b 5y ago
  Too easy to get around, as soon as company A starts making $11B they make a new company B that charges $1B for some random service, probably "consulting".
  - samstave 5y ago
    Thats actually what a lot of firms do, and what was really prominant in the Cannabis industry; Cannabis companies couldnt do "real banking" do to federal shenanigans. So instead why dispensaries would do, is make another LLC who buys the building and all the building permits that are municipally regulated - then as the municipality zoned and approved locations and projects for dispensaries and distribution licenses (which had a multitude of their own specific restrictions) They would then rent the facilities for ridiculous rental amounts which the rental company would legally be able to put into any regular bank - then make loans to the cannabis companies and dispensaries for whatever operating expenses were needed. This got really ugly when Med Men, based out of LA, was made really public because of douchebaggery happening in the company revealing how they had been gaming their own investors etc...
- spywaregorilla 5y ago
  So what happens to the company spending 10.5bn to earn 11 bn? They just get a net loss of 0.5 bn? edit: Or lets pick a real example and see how that works out. ArcelorMittal is a major steel provider. They sold $53B last year. They had a tough year though, so their final net loss was actually about half a billion. Under your proposal, they would have lost 43 billion dollars. Uh oh, you just collapsed the steel industry.
  - Cederfjard 5y ago
    I assume the idea is that large companies such as this would have a period of time to scale down operations to the largest size where it still makes sense, and then more competitors would pop up to take over the market share they leave behind. I’m not defending the proposal since I’m too ignorant to have an opinion worth speaking out loud, but that was my interpretation at least.
    - CPLX 5y ago
      It’s even simpler. They’d split up into pieces. Seeing as how there are very few massive companies that weren’t created by piecing together smaller companies in the first place it shouldn’t confuse anyone. Also companies spin off parts constantly when they think it’s in their interest so they idea they won’t know how to do it is frivolous. You could certainly make an argument that my $10bn number is too low, or that there should be a sliding scale of some sort but the concept and it’s likely outcome is very easy to understand.
      - spywaregorilla 5y ago
        It's a silly idea because plenty of companies have high revenue and low profit (or net loss), and are not anti-competitive in the slightest. An arbitrary revenue cap doesn't help the situation at all, as evidenced by the steel company. Disincentivizing growth is... dumb.
        CPLX 5y ago
        Nah. Splitting up ArcelorMittal is a fucking great idea. Our competitive landscape is being absolutely choked by anti-competitive behavior, monopoly, and single point of failure problems in supply chains, labor markets, commodities markets, and everything else. It’s unsafe and bad for society and we should take decisive and aggressive action to stop it. Instead we’re so accustomed to it and dulled into submission by decades of corporate PR efforts that people will somehow think it makes sense to reflexively advocate for lawless monopolists[0] on message boards in the name of “growth”. [0] https://www.reuters.com/article/us-arcelor-africa-antitrust-idUKKCN10X0WJ https://www.reuters.com/article/us-arcelor-africa-antitrust-... https://www.hindustantimes.com/business/arcelormittal-fined-415-mn-by-french-competition-council/story-6crnNaAmiyLMKuB7QqyD1K.html https://www.hindustantimes.com/business/arcelormittal-fined-... https://www.luxtimes.lu/en/business-finance/arcelormittal-fined-for-anti-competitive-conduct-by-german-regulator-602d60abde135b9236965421 https://www.luxtimes.lu/en/business-finance/arcelormittal-fi...
- jacurtis 5y ago
  While I would definitely entertain extreme tax tiers at high revenue limits (like $10B/yr), it is important to note that there is value in Apple making money. There are a lot of jobs created between the $10B and $1T levels. And as citizens of Apple's home nation, it greatly benefits us that those high-quality jobs are available. A 100% tax (or even 80%) tax would discourage a lot of products from existing. Apple would probably move down to simply offering just phones and apps only and removing everything else. I know that sounds good in theory, but there are indirect benefits for these other services that they offer, in addition to jobs. It also bolster's California's economy all the way down to bodegas, bars, restaurants, and hobby shops. So an alternative tax like 60% on revenues above $50B that can not be deducted against might be a more reasonable alternative.
vkou 5y ago
Sure, but why limit this to tech companies? Let's also apply this to banks, landlords, governments, grocery chains, and employers in general. Why should I not get the best wages, negotiated employment agreement, interest rates, lease terms, and deal with the IRS on taxes that I really don't want to pay as my most successful peer? Banks bend over backwards for their VIP customers, why shouldn't they do the same for me? My neighbours didn't get a rent increase this month because my landlord likes them, why should I have to negotiate for getting the same thing? Bill on my team got a 30% bonus this year, I also want a 30% bonus... And would love to see this sort of thing codified in law.
- djyaz1200 5y ago
  Having this requirement when dealing with tech monopolies is uniquely helpful because in some cases there is no alternative. We can always rent, shop or bank other places. I'd argue where there isn't a thriving marketplace of choice monopolies should have to have the same rules with all their partners.
  - trowapplea12132 5y ago
    You can always use other software as well. The only reason HN believe Apple to be a monopoly is because the product they purchased does what it was advertised to do - security through chain of trust via an good-but-imperfect organization. It's only a legal monopoly if the courts say so, and the judge in Epic v Apple defined the market in a way that actually made sense - they aren't a monopoly on mobile game purchases, but they did took anticompetitive actions in that market to stifle competition. > I'd argue where there isn't a thriving marketplace of choice monopolies should have to have the same rules with all their partners. They can't have a monopoly on iPhones because the iPhone isn't a market - it's a device where the App Store is the killer feature. There are other products you can buy that compete with the iPhone and its app store.
    - deleted 5y ago
      [deleted]
    - 5y ago
munificent 5y ago
Better plan? How about we stop letting tech companies reach "monopoly scale"?
- liquidify 5y ago
  The market is globally competitive. How would expect tech companies to compete if you have policies that continuously place them at a disadvantage against global competitors. Tariffs don't solve these problems either. OP's suggestion is pretty decent idea relative to playing wack a mole with price fixing while trying to make sure your country's corps can compete on the global market.
  - modo_mario 5y ago
    >How would expect tech companies to compete if you have policies that continuously place them at a disadvantage against global competitors. We can look at a map of most popular messaging apps per country in the light of todays downtime and see that they don't or they compete with themselves. It also shows the only places where competition can grow to a scale where it can even hope to start competing and survive is where there's first a protectionist policy in place favoring domestic players.
  - rhizome 5y ago
    It's not a free market, it has never been a free market, and this is just another part of a market that should also be regulated.
  - munificent 5y ago
    > The market is globally competitive. If national governments are going to allow companies to be trans-national, then we clearly need trans-national regulatory authorities. This isn't rocket science. People act like corporations are immutable acts of divine intervention. They are an artifact we create and we are free as a society to change their parameters however we wish.
- georgeecollins 5y ago
  I agree, but there may be certain things like electric power grids, sewer systems, messaging systems, high bandwidth ISPs, where it may not make a lot of sense to have two (or not two in a particular geographic location). In that sense you may need some regulation.
abvdasker 5y ago
This is a solved problem. Just do what most American cities do with other natural monopolies like utilities: use careful price controls to cap margins and slow rate increases. You don't need to invent some esoteric market-based solution, especially for a service where marginal costs are near zero and supply is almost infinite.
- jdhzzz 5y ago
  Make them a (common carrier)[https://en.wikipedia.org/wiki/Common_carrier https://en.wikipedia.org/wiki/Common_carrier] just like was done for WAN access in the USA. Hahahahahaha.
- kortilla 5y ago
  Absolutely not a solved problem. The utilities have no reason to innovate at that point. In my local municipality I have no way to choose renewable energy apart from building my own power plant on my roof. That’s a complete failure of these government granted monopolies.
  - 8note 5y ago
    What incentive does the app store have to innovate now?
  - spywaregorilla 5y ago
    There's no such thing as choosing renewable energy on a grid. Energy is fungible. If you get on one of those "choose green" schemes, you're just getting the same energy but also buying some credits from somewhere else.
  - enjo 5y ago
    The regulating bodies of those utilities work hard to create incentives for them to innovate. I spent four years of my career working on energy programs with major utilities around the country in which they tried to incentive reductions in energy usage. Which is a curious statement: why would a electrical utility want people to use less electricity? The reason is because the regulatory agencies created incentives within the regulatory framework to encourage them to do it. Basically the regulators start with an outcome, bake that outcome into how utilities get paid, and then let the utility innovate to figure out how to do it. This led to meaningful reduction in energy usage across many markets.

CPLX 5y ago

We could also just put a tax of 100% on any revenue in excess of $10bn a year and nip this entire society-destroying problem in the bud.

smallerfish 5y ago
It's an interesting thought experiment at least. What would the hidden incentives of something like that be? For example, if a company wanted to keep growing, it would have to split organically into separate corporate entities. What would stop them establishing "favored" relationships with each other? Say for example Facebook splits out "Zuckerburg data centers inc" - what's to stop them pricing themselves above market to avoid taking on other customers, and then giving FB a hefty discount? You could mandate that there be no board overlap, but shareholders would probably receive a split.
- amelius 5y ago
  If Zuckerberg data centers wants to keep growing, then at some point they will have to find external customers.
- CPLX 5y ago
  You'd need to actually draft a law rather than write it on a napkin and there would be armies of very well paid lawyers trying to avoid it, but that's common to any attempt to break up concentrated power. In that context it wouldn't be all that hard. You'd need to figure out some definitions for common ownership, joint enterprise, and so on. A lot of those laws and definitions already exist. It's only really in the last few decades that we've abandoned antitrust law but we have successfully done things like this in the past.
  - ameister14 5y ago
    When have we capped the potential revenue of companies successfully in the past? I've never heard of it
newsbinator 5y ago
Why not $9bn a year?
- EastOfTruth 5y ago
  You got to start the discussion somewhere.... For me, I t think that it should be related to the number of employees.
  - loktarogar 5y ago
    A cap on employees would probably be a negative thing, but a cap on revenue per employee would incentivise hiring people
    - EastOfTruth 5y ago
      that's the solution
EastOfTruth 5y ago
Talking about monopolies, why does Facebook and HN have network issues at the same time.
- bigthymer 5y ago
  Maybe people visit other sites when the ones they would have used go down? I don't know for sure but it is a plausible explanation for me.
  - EastOfTruth 5y ago
    makes sense but at the same time it surprises me
moreira 5y ago
That -sounds- simple, but it isn't, and in reality any company would easily bypass that by simply creating other companies to take some of the revenue. They already do that to avoid international taxes. As an example, the US charges tax on all income coming to a US company so companies have entities in countries like Ireland and Luxembourg to keep that money out of the US government's reach. So Apple might have $100B stuck in Ireland, unable to bring it to the US, but it doesn't matter, that money still counts for their shareholders. And it's the same thing here. If you try to tax $10B they'll just have 100 companies all making $9.9B/yr, in a variety of different countries, completely separate from each other, and you're back where you started. And while this would be extremely complicated/expensive for them to manage, it'd be profitable because the alternative is to get a 100% tax on those profits. Taxes aren't easy. And calling a company that sells phones a "society-destroying problem" is a bit hyperbolic, don't you think?
- CPLX 5y ago
  There’s nothing simple about it. It would require pages of statute as well as regulatory guidance, and some of the most wealthy and capable forces in our modern world would be arrayed against it trying to avoid and evade the rules. None of those things make the proposal impossible however. It would be a dismal society indeed if we unilaterally surrendered to every instance of centralized malevolent power without a fight.
ric2b 5y ago
Too easy to get around, as soon as company A starts making $11B they make a new company B that charges $1B for some random service, probably "consulting".
- samstave 5y ago
  Thats actually what a lot of firms do, and what was really prominant in the Cannabis industry; Cannabis companies couldnt do "real banking" do to federal shenanigans. So instead why dispensaries would do, is make another LLC who buys the building and all the building permits that are municipally regulated - then as the municipality zoned and approved locations and projects for dispensaries and distribution licenses (which had a multitude of their own specific restrictions) They would then rent the facilities for ridiculous rental amounts which the rental company would legally be able to put into any regular bank - then make loans to the cannabis companies and dispensaries for whatever operating expenses were needed. This got really ugly when Med Men, based out of LA, was made really public because of douchebaggery happening in the company revealing how they had been gaming their own investors etc...
spywaregorilla 5y ago
So what happens to the company spending 10.5bn to earn 11 bn? They just get a net loss of 0.5 bn? edit: Or lets pick a real example and see how that works out. ArcelorMittal is a major steel provider. They sold $53B last year. They had a tough year though, so their final net loss was actually about half a billion. Under your proposal, they would have lost 43 billion dollars. Uh oh, you just collapsed the steel industry.
- Cederfjard 5y ago
  I assume the idea is that large companies such as this would have a period of time to scale down operations to the largest size where it still makes sense, and then more competitors would pop up to take over the market share they leave behind. I’m not defending the proposal since I’m too ignorant to have an opinion worth speaking out loud, but that was my interpretation at least.
  - CPLX 5y ago
    It’s even simpler. They’d split up into pieces. Seeing as how there are very few massive companies that weren’t created by piecing together smaller companies in the first place it shouldn’t confuse anyone. Also companies spin off parts constantly when they think it’s in their interest so they idea they won’t know how to do it is frivolous. You could certainly make an argument that my $10bn number is too low, or that there should be a sliding scale of some sort but the concept and it’s likely outcome is very easy to understand.
    - spywaregorilla 5y ago
      It's a silly idea because plenty of companies have high revenue and low profit (or net loss), and are not anti-competitive in the slightest. An arbitrary revenue cap doesn't help the situation at all, as evidenced by the steel company. Disincentivizing growth is... dumb.
      - CPLX 5y ago
        Nah. Splitting up ArcelorMittal is a fucking great idea. Our competitive landscape is being absolutely choked by anti-competitive behavior, monopoly, and single point of failure problems in supply chains, labor markets, commodities markets, and everything else. It’s unsafe and bad for society and we should take decisive and aggressive action to stop it. Instead we’re so accustomed to it and dulled into submission by decades of corporate PR efforts that people will somehow think it makes sense to reflexively advocate for lawless monopolists[0] on message boards in the name of “growth”. [0] https://www.reuters.com/article/us-arcelor-africa-antitrust-idUKKCN10X0WJ https://www.reuters.com/article/us-arcelor-africa-antitrust-... https://www.hindustantimes.com/business/arcelormittal-fined-415-mn-by-french-competition-council/story-6crnNaAmiyLMKuB7QqyD1K.html https://www.hindustantimes.com/business/arcelormittal-fined-... https://www.luxtimes.lu/en/business-finance/arcelormittal-fined-for-anti-competitive-conduct-by-german-regulator-602d60abde135b9236965421 https://www.luxtimes.lu/en/business-finance/arcelormittal-fi...
jacurtis 5y ago
While I would definitely entertain extreme tax tiers at high revenue limits (like $10B/yr), it is important to note that there is value in Apple making money. There are a lot of jobs created between the $10B and $1T levels. And as citizens of Apple's home nation, it greatly benefits us that those high-quality jobs are available. A 100% tax (or even 80%) tax would discourage a lot of products from existing. Apple would probably move down to simply offering just phones and apps only and removing everything else. I know that sounds good in theory, but there are indirect benefits for these other services that they offer, in addition to jobs. It also bolster's California's economy all the way down to bodegas, bars, restaurants, and hobby shops. So an alternative tax like 60% on revenues above $50B that can not be deducted against might be a more reasonable alternative.

vkou 5y ago

Sure, but why limit this to tech companies? Let's also apply this to banks, landlords, governments, grocery chains, and employers in general. Why should I not get the best wages, negotiated employment agreement, interest rates, lease terms, and deal with the IRS on taxes that I really don't want to pay as my most successful peer? Banks bend over backwards for their VIP customers, why shouldn't they do the same for me? My neighbours didn't get a rent increase this month because my landlord likes them, why should I have to negotiate for getting the same thing? Bill on my team got a 30% bonus this year, I also want a 30% bonus... And would love to see this sort of thing codified in law.

djyaz1200 5y ago
Having this requirement when dealing with tech monopolies is uniquely helpful because in some cases there is no alternative. We can always rent, shop or bank other places. I'd argue where there isn't a thriving marketplace of choice monopolies should have to have the same rules with all their partners.
- trowapplea12132 5y ago
  You can always use other software as well. The only reason HN believe Apple to be a monopoly is because the product they purchased does what it was advertised to do - security through chain of trust via an good-but-imperfect organization. It's only a legal monopoly if the courts say so, and the judge in Epic v Apple defined the market in a way that actually made sense - they aren't a monopoly on mobile game purchases, but they did took anticompetitive actions in that market to stifle competition. > I'd argue where there isn't a thriving marketplace of choice monopolies should have to have the same rules with all their partners. They can't have a monopoly on iPhones because the iPhone isn't a market - it's a device where the App Store is the killer feature. There are other products you can buy that compete with the iPhone and its app store.
  - deleted 5y ago
    [deleted]
  - 5y ago

munificent 5y ago

Better plan? How about we stop letting tech companies reach "monopoly scale"?

liquidify 5y ago
The market is globally competitive. How would expect tech companies to compete if you have policies that continuously place them at a disadvantage against global competitors. Tariffs don't solve these problems either. OP's suggestion is pretty decent idea relative to playing wack a mole with price fixing while trying to make sure your country's corps can compete on the global market.
- modo_mario 5y ago
  >How would expect tech companies to compete if you have policies that continuously place them at a disadvantage against global competitors. We can look at a map of most popular messaging apps per country in the light of todays downtime and see that they don't or they compete with themselves. It also shows the only places where competition can grow to a scale where it can even hope to start competing and survive is where there's first a protectionist policy in place favoring domestic players.
- rhizome 5y ago
  It's not a free market, it has never been a free market, and this is just another part of a market that should also be regulated.
- munificent 5y ago
  > The market is globally competitive. If national governments are going to allow companies to be trans-national, then we clearly need trans-national regulatory authorities. This isn't rocket science. People act like corporations are immutable acts of divine intervention. They are an artifact we create and we are free as a society to change their parameters however we wish.
georgeecollins 5y ago
I agree, but there may be certain things like electric power grids, sewer systems, messaging systems, high bandwidth ISPs, where it may not make a lot of sense to have two (or not two in a particular geographic location). In that sense you may need some regulation.

abvdasker 5y ago

This is a solved problem. Just do what most American cities do with other natural monopolies like utilities: use careful price controls to cap margins and slow rate increases. You don't need to invent some esoteric market-based solution, especially for a service where marginal costs are near zero and supply is almost infinite.

jdhzzz 5y ago
Make them a (common carrier)[https://en.wikipedia.org/wiki/Common_carrier https://en.wikipedia.org/wiki/Common_carrier] just like was done for WAN access in the USA. Hahahahahaha.
kortilla 5y ago
Absolutely not a solved problem. The utilities have no reason to innovate at that point. In my local municipality I have no way to choose renewable energy apart from building my own power plant on my roof. That’s a complete failure of these government granted monopolies.
- 8note 5y ago
  What incentive does the app store have to innovate now?
- spywaregorilla 5y ago
  There's no such thing as choosing renewable energy on a grid. Energy is fungible. If you get on one of those "choose green" schemes, you're just getting the same energy but also buying some credits from somewhere else.
- enjo 5y ago
  The regulating bodies of those utilities work hard to create incentives for them to innovate. I spent four years of my career working on energy programs with major utilities around the country in which they tried to incentive reductions in energy usage. Which is a curious statement: why would a electrical utility want people to use less electricity? The reason is because the regulatory agencies created incentives within the regulatory framework to encourage them to do it. Basically the regulators start with an outcome, bake that outcome into how utilities get paid, and then let the utility innovate to figure out how to do it. This led to meaningful reduction in energy usage across many markets.